Rand Capital — Third Quarter Fiscal Year 2026 Earnings Summary

Financial Performance:

• Total investment income was $1.3 million for the quarter, a 17% decrease from $1.6 million in the third quarter of 2025, driven by lower interest income from portfolio companies on non-accrual status and reduced fee income.
• Interest income from portfolio companies increased 4% sequentially to $1.2 million, supported by investments made earlier in 2026.
• Net investment income was $669,000 ($0.23 per share), down from $993,000 ($0.33 per share) in the prior-year period.
• Total expenses rose to $769,000 from $596,000 in the prior-year period, primarily due to higher professional fees, increased interest expense from higher average borrowings, and higher base management fees.
• Net assets were $51.5 million ($17.36 per share) at September 30, 2026, compared to $17.33 per share at June 30, 2026 and $17.57 per share at December 31, 2025.
• Portfolio fair value reached $56.7 million, a 17.0% increase from $48.5 million at year-end 2025.
• Non-cash payment-in-kind (PIK) interest totaled $99,000 (8% of portfolio interest income), down from 43% in the prior-year period, reflecting four portfolio companies on non-accrual status.
• Net realized and unrealized gains on investments were $275,000 for the quarter.

Business Segments and Product Lines:

• The portfolio consists of 20 businesses, comprised of approximately 77% debt investments and 23% equity investments at fair value.
• The annualized weighted average yield of debt investments was 8.97% at September 30, 2026, down from 11.3% at December 31, 2025, primarily due to timing of non-accrual placements.
• Specific portfolio activity included a $2.0 million realized loss on BMP Swanson Holdco LLC (offset by a reversal of prior unrealized depreciation), a $250,000 principal repayment and $7,500 prepayment fee from BlackJet Direct Marketing LLC, and a $16,250 principal repayment from Feature Healthcare LLC.
• Valuation increases were recorded for Bauer Sheet Metal and Fabricating, Inter-National Electronic Alloys, and Open Exchange, offset by decreases in Autotality, ITA Acquisition, and OnCore Golf.
• No new or follow-on cash investments were made during the third quarter; $12.0 million was deployed in the first nine months of 2026, all within the first half of the year.

Liquidity and Capital Resources:

• Cash and cash equivalents ended the quarter at $223,000, down from $4.2 million at December 31, 2025.
• The Company had $5.0 million outstanding on its line of credit as of September 30, 2026, with estimated remaining availability of approximately $12.4 million.
• The applicable borrowing rate at quarter-end was 7.4%.
• No common stock repurchases occurred during the third quarter of 2026.

Management Commentary and Tone:

• CEO Daniel P. Penberthy noted that interest income increased sequentially, supported by new investments and a stable income base, while improved operating performance at several portfolio companies helped offset declines elsewhere.
• Management stated its focus remains on strengthening the income-producing base, actively managing challenged investments, and preserving financial flexibility.
• The Company intends to remain selective in committing capital, balancing new opportunities with existing portfolio needs and long-term shareholder returns.

Other Key Points:

• Rand paid a regular quarterly cash dividend of $0.29 per share on September 9, 2026, totaling approximately $861,000.
• Dividends declared during the third quarter ($861,000) were offset by net investment income ($669,000) and net realized/unrealized gains ($275,000), resulting in a net increase in net assets from operations of $944,398 for the quarter.
• The Company is an externally managed business development company (BDC) focusing on lower middle market companies with revenues over $10 million and EBITDA over $1.5 million.